Robert Lee and Rebecca Waters - Page 3

                                        - 2 -                                         
               Respondent determined a deficiency in petitioners’ Federal             
          income tax, an accuracy-related penalty, and an addition to tax             
          for 1997 as follows:                                                        

               Penalty    Addition to tax                                             
               Year   Deficiency   Sec. 6662   Sec. 6651(a)(1)                        
               1997     $7,889     $1,577.80        $441                              

               After concessions by petitioners,2 the issues for decision             
          are as follows:                                                             
               (1) Whether for 1997, the taxable year in issue, petitioners           
          are entitled to a deduction under section 165(c)(2) for a loss              
          attributable to (a) the unauthorized removal of furnishings and             
          fixtures from an apartment building in 1996 and (b) the                     
          foreclosure on such building in 1996.  We hold that they are not.           
               (2) Whether petitioners are liable for the accuracy-related            
          penalty under section 6662(a) for negligence or intentional                 
          disregard of rules or regulations.  We hold that they are to the            
          extent provided herein.                                                     

               2 In the petition, petitioners disputed the entire                     
          deficiency determined by respondent in the notice of deficiency.            
          However, petitioners did not assign any error or allege any facts           
          with respect to respondent’s determinations regarding: (1) The              
          receipt of unreported nonemployee compensation in the amount of             
          $3,525; (2) the imposition of self-employment tax on such                   
          nonemployee compensation; and (3) the disallowance of itemized              
          deductions for charitable contributions and unreimbursed employee           
          expenses.  Moreover, at trial, petitioners did not dispute any of           
          these adjustments.  Accordingly, we regard petitioners as having            
          conceded these matters.                                                     

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